Monday, May 3, 2010

The invisible hand on your throat

China’s central bank surprised everybody over the May Day holiday weekend by announcing another increase in capital requirements for banks, the third this year. This drastically cuts lending and is being seen as a move to control domestic inflation in advance of allowing the Yuan to rise against the USD. This would produce a tariff like increase on things the US imports from China while in theory giving exports to China from all its trading partners a boost. Don’t plan on an increase in US exports to China since their economy is tightly controlled, the “invisible hand” that the Neo Cons claim regulates the market for all things is in China an iron fist. China has a China first policy. America has a Wall Street first policy.

The Wall Street bankers version of the iron fist is to move massive amounts of money around overwhelming the little guy. China isn’t shy about doing this either since they have a 2.5 trillion surplus to work with but they also back up their financial moves with strict controls or even blunt force to get what they want done. Sort of like Dick Cheney’s Iraq oil policy.

Speaking of oil, Wall Street is planning to drive oil back up to a hundred USD a barrel courtesy of the current disaster. So far, two rigs have had to shut down because of the growing threat of spreading oil. They are also trying to hype the prospect that drilling might actually be regulated. The truth is that there is a glut of oil and the price should go back to pre-Dick Cheney levels but until the Wall Street banks are brought under control that isn’t likely.

The FDIC broke new ground Friday with the failure of three large banks in Puerto Rico, the first since the S&L debacle of the elder Bush’s regime. These three banks closing alone will cost us 5.28 Billion USD. They also closed a bank in Everett WA at a cost of 1.37 Billion USD and another in Port Huron MI for a mere 615 million. A state charted bank in Creve Coeur, Missouri cost just chicken feed of 51 million.

The total bill for last Friday’s closings alone was 7.5 billion, the state of Ohio is trying to slash 8 billion from its budget by cutting workers pay by 10 days a year. This is enough to push many of them out of the middle class and does nothing for the economy but make things worse. The invisible hand has us by the throat. www.prairie2.com

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